Erik.Ranheim@intertanko.comManager Research and Projects

Maritime Transportation of Energy from Russia & Central Asia Challenges & Opportunities

St Petersburg 5 & 6 October 2004

Setting the SceneWorld of shortages of vital commodities?

Fresh water short in all continentsGrain (105 m ts over use in 2003) Oil – Will oil supply limit tank demand?

Inability to predict the future

CANNOT succeed without a portion of paranoia (Bill Gates). Continuously search for and identify what can cause problems and take necessary precautions on how to solve them

Setting the Scene

World would have been facing a 3rd oil crisis without Russian expansion

How much more and for how long?

Pipelines

Tanker Safety performance high

Oil Export

Russian oil

***

*

Market effect of one mbd transported various trades

324

338

328

46

314 billion tonne miles

0 50 100 150 200 250 300 350

Ceyhan-US

Novorossisk- US

Ras Tanura-Yokohama

Nakhodka-Yokohama

Ras Tanura-China

bn tonne miles

World increase in oil demand supplied by FSU and the rest

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Others

FSU

Supplied by FSU in excess of demand

51% 28% 97% 79% 177% 39% 35%

mbd

World largest crude oil exporters - mbd

0.5

1.5

2.5

3.5

4.5

5.5

6.5

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

P04

Mbd

Saudi ArabiaFSUNorwayIranUAENigeriaVenezuelaUKMexicoKuwait

FSU crude oil and products export - mbd

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 P04

Black Sea**Baltic Sea**

Druzhba Pipeline

**seaborne

Others

European crude oil import from FSU

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

1H04

Since 1993,Oil consumption down 0.8 mbd to 19.8 mbdCrude oil import from FSU up 3.0 mbdProducts import from FS 0.9 mbd 2Q04

mbd

Oil export from FSU 1H04

Source: IEA

OECD Europe

East Europe, others

China

N AmericaOECD Pacfic

Oil export by tanker

Baltic export will increase the mostNew markets opening North and East, and from CeyhanPipelines will probably take market shares from Eastwards transportation in the long term

Safety Performance

’000 tonnes

The Turkish Straits are one of the world's busiest sea lanes (50,000

vessels annually, including 5,500 oil tankers)

Under the Montreux Convention of 1936, commercial shipping has the right of free passage through the Bosporus and Turkish

Straits in peacetime, although Turkey claims the right to impose regulations for safety and environmental purposes.

Source: US EIA/DOE

Total number of tanker incidents reported

Collisions, groudings, Hull&Machinery, Fire&Explosions, others

0

200

400

600

800

1000

1200

78 80 82 84 86 88 90 92 94 96 98 00 02 P04

Baltic/Black Sea/E Med

Total

Tanker incidents Baltic, Black Sea, Bosporus, East Med

0

5

10

15

20

25

30

35

40

197819

7919

8019

8119

8219

8319

8419

8519

8619

8719

8819

8919

9019

9119

9219

9319

9419

9519

9619

9719

9819

9920

0020

0120

0220

0320

040

2,500

5,000

7,500

10,000

12,500

15,000

17,500

20,000N SeaBaltic EastBosp/DardBlack SeaMed E/AegeanPollution

No. inc. Ts. pol106,000

Most incidents in the Baltic related to ice

Tanker trade by hull - Baltic and Black Sea

tankers above 50,000 dwt

0%

20%

40%

60%

80%

100%

SH

DB/DS

DD

DH: 42% to 95%Source:Fearnleys

0%

20%

40%

60%

80%

100%

SH

DB/DS

DH

DH: 22% to 76%Source:Fearnleys

Conclusion

Conclusion

Russian oil export essential to the world market and will be of increasing importance to the tanker marketPipelines may in medium to long term take market sharesSafety performance of tankers is high and the fleet rapidly modernized, tankers trading out of the Baltic 95% DH, out of the Black sea 76% DH 1Q04.